) The determination of the net periodic pension expense is a function of five elements.

Required:

List and briefly describe each of the elements.

2). UniCredit Plc operates a defined benefit plan for its employees, conditional on a minimum employment period of seven (7) years. The present value of the future benefit obligations and fair value of its plan assets on 1 January 20X1 were 110 million and 150 million respectively.

The pension plan received contributions of 7 million and paid pensions to former employees of 10 million during the year.

Extracts from the most recent actuarys report show the following:

Present value of pension plan obligation at 31 December 20X1 116m

Fair value of plan assets at 31 December 20X1 140m

Present cost of pensions earned in the period 11m

Yield on high quality corporate bonds at 1 January 20X1 10%

On 1 January 20X1, the rules of the pension plan were changed to improve benefits for plan members. The actuary has advised that this will cost 10 million.

Required:

Produce the extracts for the financial statements for the year ended 31 December 20X1.

Assume contributions and benefits were paid on 31 December.

3). Essex Business School operates a defined benefit pension plan for its staff. At 1 January 20X2 the fair value of the pension plan assets was 2,600,000 and the present value of the plan liabilities was 2,900,000.

The actuary estimates that the current and past service costs for the year ended 31 December 20X2 is 450,000 and 90,000 respectively. The past service cost is caused by an increased in pension benefits and takes effect from 31 December 20X2. The plan liabilities at 1 January and 31 December 20X2 correctly reflect the impact of this increase.

The interest rate on high quality corporate bonds for the year ended 31 December 20X2 was 8%.

The pension plan paid 240,000 to retired members on 31 December 20X2. On the same date, Essex Business School paid 730,000 in contributions to the pension plan and this include 90,000 in respect of past service cost.

At 31 December 20X2 the fair value of the pension plan assets is 3,400,000 and the present value of the plan liabilities is 3,500,000.

In accordance with IAS 19 Employee benefits, Essex Business School recognises remeasurement gains and losses in Other Comprehensive Income in which they occur.

Required:

Calculate the remeasurement gains or losses on pension plan assets and liabilities that will be include in Other Comprehensive Income for the year ended 31 December 20X2. (Round all figures to the nearest 000).

4). Engineers & Planners plc is a leading support services company which focuses on the upstream sector of the oil and gas industry in Scotland. The company operates the Engineers & Planners Pension Plan B which is classified as a defined benefit plan and the Engineers & Planners Pension Plan A which is a defined contribution plan.

Owing to recent changes to the composition of the Board, the new members are confused about the difference of the two schemes run by the company and want a briefing on the two schemes to inform their decision of which one to exit owing to recent liquidity challenges faced by the company.

Required:

Draft a report suitable for presentation to the directors of Engineers & Planners which:

(a). Discuss the nature of and differences between a defined contribution plan and a defined benefit plan with specific reference to the companys two schemes.

(Show working out)